Why a shared understanding between IT and business is important

If IT and the business have conflicting objectives and success criteria, the company's pace of innovation will suffer.

Many businesses are encountering political and/or monetary decisions (including mergers or acquisitions) that require adaptability – also digitally.

When seeking to ensure that IT and digital solutions can create the best conditions for business development, the co-existence of new systems (for example due to acquisitions) and existing, older (legacy) systems and the desire for new solutions and systems can be quite complicated, if the right foundations are not in place.

The important thing is for the business units to understand the fact that IT helps to create results by exploiting architecture and systems. On the other hand, a tacit understanding is needed in the IT department that IT is only a tool for optimising and running the business. IT must never be an end in itself. A classic example of the lack of mutual understanding between business and IT executives is ‘shadow IT’.

Shadow IT is when investments are made by a business unit in SaaS solutions, narrow silos and the use of private Dropboxes, and when the costs of various IT services come out of a business unit’s budget rather than being included in the overall IT budget. Studies have shown that up to 40% more is being spent on IT than appears from the actual IT budget.

The consequences of shadow IT are therefore as depressing as they are serious:

  • Lack of access control
  • Units using shadow IT do not operate with the same data sources as those using corporate tools, and may therefore be using false data
  • Lack of compliance, for example storing GDPR data in iCloud
  • Cross-channel consistency is difficult to achieve.

Shadow IT generally slows down how fast a business can implement new solutions and features, preventing it from using (and reusing) data across channels. There are two aspects to this problem:

  1. IT fails to provide the tools the business needs, hence the business purchases solutions on its own
  2. The business is unable to collaborate with IT to make the most of the tools in which it has already invested

Once the business understands the IT department’s IT strategy and is familiar with the application landscape, it can stipulate better requirements. Once IT better understands the needs of the business for solutions, there is no need to purchase shadow IT. Once one agrees on the goals, the collaboration needs to function on a daily basis. If IT and the business have conflicting objectives and success criteria, the pace of innovation will suffer.

Being able to navigate in this field requires strong communication skills, business understanding and people skills for the CIO to be able to explain the strategy and listen and provide feedback on the process of ensuring that the business and IT have the same objectives.

The CIO's important role

Today, a CIO must act as a partner with line managers and middle management in their efforts to strengthen cost control and CX/UX with regard to markets, customers and employees. The business ought to concentrate on sales, customer service, communication, value propositions and transactions. IT must engage in dialogue about how to support the business agenda, which tools to use and how to best go about it, based on the architecture and strategy for using a mix of cloud services and on-premise solutions defined by the IT department – in other words, technology-supported business development.

In the pursuit of technology-supported business development, the CIO will have to take steps that may not always be popular, but are right.

In some businesses, there will be resistance among employees to machines taking over tasks that have been performed by people for many years. However, there are so many epoch-making initiatives being made within native cloud applications, infrastructure, DevOps and cloud services that it way outstrips what the human brain can manage. This is where it is important that the CIO acts as a leader who is prepared to initiate cloud services and technologies which can optimise processes and working methods. This will reduce the tendency of the business towards investing in shadow IT and enhance the relationship between the business and IT, increasing pace of innovation as a result.

System support for the business

Being able to communicate, understand the vision, work towards common goals, act as a partner and have a customer-centric mindset as a CIO is fundamental to IT and the business being able to jointly achieve success. But the CIO must never forget their own core expertise.

A CIO must be able to at least explain:

  • Why IT architecture is important
  • Why businesses should consolidate their systems on fewer platforms
  • Why businesses must avoid shadow IT

If the CIO fails to maintain this focus when collaborating with the business, the result will be a chaotic mess, in which the launching of new digital initiatives drowns in technical debt and slow releases.
On the other hand, if a CIO can explain why the above points are important, the business will be well on its way to technology-supported growth based on common objectives, collaboration and the ability to offer strong solutions.

The CIO will consequently have considerable responsibility in the executive management to drive technological business development that focuses on the pace of innovation without compromising on the need for a strategically designed application landscape and architecture.

Putting clients first

Casper Dumont

Engagement Director

+45 31 39 07 15
casper.dumont@kraftvaerk.com